Moderately Diversified Growth Portfolio with High Risk and Technology Sector Dominance

Report created on Dec 4, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of a mix of ETFs and individual stocks, with a strong emphasis on U.S. equities. Notably, the Schwab U.S. Large-Cap Growth ETF holds the largest position, followed by the SPDR® Portfolio S&P 500 ETF. This setup indicates a preference for growth-oriented investments. Having a variety of ETFs suggests a focus on diversification, though individual stocks like Amazon and Berkshire Hathaway introduce some concentration risk. It's a moderately diversified portfolio, which means it seeks to balance risk and return, but could benefit from further diversification to reduce potential volatility.

Growth Info

Historically, the portfolio has performed impressively with a CAGR of 21.14%. This indicates strong growth potential, although it's accompanied by a maximum drawdown of -25.86%, highlighting significant volatility. The fact that 90% of returns are concentrated in just 30 days suggests that timing plays a crucial role in the portfolio's performance. This performance pattern is typical for growth-focused portfolios, which often experience large swings. To optimize returns, it might be beneficial to consider strategies that could mitigate drawdowns, potentially through diversification or risk management techniques.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows a wide range of potential future outcomes. The 5th percentile projects a 268.38% return, while the median is 1,294.05%, and the 67th percentile reaches 1,993.01%. This variability underscores the inherent uncertainty in financial markets. Monte Carlo simulations provide a statistical method to assess potential future performance, considering different market conditions. Given these projections, it's crucial to maintain a balanced approach and be prepared for different scenarios, ensuring that the portfolio aligns with long-term financial goals and risk tolerance.

Asset classes Info

  • Stocks
    97%
  • Cash
    3%

The asset allocation is heavily skewed towards stocks, comprising over 97% of the portfolio, with minimal exposure to bonds and cash. This high equity exposure aligns with the growth profile, but it also increases vulnerability to market downturns. A more balanced allocation could provide stability during volatile periods. It's essential to evaluate whether this stock-heavy composition aligns with the investor's risk tolerance and investment horizon. Adjusting the allocation to include more bonds or cash could help cushion against potential losses and provide liquidity when needed.

Sectors Info

  • Technology
    30%
  • Financials
    17%
  • Consumer Discretionary
    16%
  • Industrials
    9%
  • Health Care
    8%
  • Telecommunications
    7%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio's sector allocation is dominated by technology, which constitutes over 30% of the investments. This concentration can lead to significant exposure to sector-specific risks, such as regulatory changes or technological disruptions. While technology has been a strong performer, diversifying into other sectors could enhance stability and reduce volatility. A more balanced sector allocation would help mitigate the impact of adverse events in any single sector. Consider evaluating the portfolio's sector exposure regularly to ensure it remains aligned with broader market trends and diversification goals.

Regions Info

  • North America
    86%
  • Asia Emerging
    3%
  • Asia Developed
    1%
  • Europe Developed
    1%

Geographically, the portfolio is heavily concentrated in North America, with over 86% of assets allocated there. While this reflects the investor's region, it limits exposure to international markets and the potential benefits of geographic diversification. Expanding into emerging and developed markets outside North America could provide additional growth opportunities and reduce regional risk. It's important to assess whether this geographic concentration aligns with the investor's objectives and risk tolerance. Considering a more global approach could enhance diversification and potentially improve risk-adjusted returns.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Fidelity® MSCI Information Technology Index ETF
    High correlation

The portfolio contains highly correlated assets, particularly within the technology sector, like the Schwab U.S. Large-Cap Growth ETF and the Fidelity® MSCI Information Technology Index ETF. High correlation means these assets tend to move in the same direction, reducing diversification benefits. It's important to identify and manage these overlaps to enhance portfolio efficiency. By reducing exposure to highly correlated assets, the portfolio can achieve better diversification, potentially smoothing out returns and reducing overall risk. Regularly reviewing asset correlations can help maintain a well-balanced and diversified portfolio.

Risk vs. return

This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.

Click on the colored dots to explore allocations.

Before optimizing, focus on reducing overlapping assets that don't enhance diversification. The portfolio can be optimized along the efficient frontier to adjust risk levels. Moving towards a riskier portfolio involves increasing exposure to high-growth assets, while a more conservative approach would involve incorporating more bonds or cash. By strategically adjusting the asset allocation, the portfolio can be aligned with specific risk and return objectives. It's important to regularly reassess the portfolio's composition to ensure it remains consistent with the investor's evolving financial goals and risk appetite.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Fidelity® MSCI Information Technology Index ETF 0.60%
  • Alphabet Inc Class A 0.20%
  • VanEck Morningstar Wide Moat ETF 0.70%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • iShares® 0-3 Month Treasury Bond ETF 4.80%
  • VanEck Semiconductor ETF 0.40%
  • iShares MSCI India Small-Cap ETF 0.30%
  • SPDR® Portfolio S&P 500 ETF 1.20%
  • Vanguard Value Index Fund ETF Shares 2.20%
  • Invesco S&P MidCap Momentum ETF 0.30%
  • Weighted yield (per year) 0.81%

The portfolio's dividend yield is relatively low at 0.81%, reflecting its growth-oriented focus. While dividends can provide a steady income stream, growth investments typically prioritize capital appreciation over income. This low dividend yield might not be suitable for investors seeking regular income. However, for those focused on long-term growth, reinvesting dividends can amplify returns. It's crucial to align the portfolio's income-generating potential with the investor's financial goals. If income is a priority, consider incorporating higher-yielding assets to balance growth with income needs.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • VanEck Morningstar Wide Moat ETF 0.47%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • VanEck Semiconductor ETF 0.35%
  • iShares MSCI India Small-Cap ETF 0.79%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Vanguard Value Index Fund ETF Shares 0.04%
  • Invesco S&P MidCap Momentum ETF 0.34%
  • Weighted costs total (per year) 0.14%

The total expense ratio (TER) of the portfolio is 0.14%, which is quite low, indicating cost-efficiency. Low costs are beneficial as they help maximize net returns over time. However, certain ETFs like the iShares MSCI India Small-Cap ETF have higher expense ratios, which could impact overall performance. It's essential to regularly review the cost structure to ensure it remains competitive and aligned with investment objectives. Keeping investment costs low is a fundamental principle of successful investing, as it allows more of the portfolio's returns to be retained by the investor.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey